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Judge rules against Exxon on ‘reopener’ Company had sought to block government collection of up to $92 million to address lingering effects of 1989 Exxon Valdez oil spill Wesley Loy For Petroleum News
A federal judge has turned back ExxonMobil’s attempt to snuff a possible government collection of a large sum of money to deal with lingering effects of the 1989 Exxon Valdez oil spill in Alaska’s Prince William Sound.
In a nine-page order issued Feb. 15, U.S. District Judge H. Russel Holland of Anchorage denied Exxon’s motion to block the collection, calling the motion “premature.”
Holland also urged the parties to quickly resolve an issue that has dragged on for years.
Roots of dispute The dispute stems from a 1991 civil settlement under which Exxon paid $900 million for the spill.
The settlement contained a “reopener” clause entitling the state and federal governments to request up to $100 million more for restoration projects to address unanticipated injury to habitat or species.
In 2006, the governments exercised the reopener, presenting Exxon with a comprehensive habitat restoration plan and a letter demand for $92 million to implement it. The presentment was based on what the governments contend was new information that relatively unweathered oil remained in the subsurface of beaches, and that the toxic oil was degrading at a far slower rate than was anticipated at the time of the 1991 settlement.
Exxon has yet to pay the demand, and the governments have yet to sue to collect it.
Rick Steiner, a retired University of Alaska professor and oil industry critic, in late 2010 began asking the judge to order Exxon to pay. That sparked a round of court arguments culminating with Holland’s Feb. 15 ruling.
No formal claim Exxon’s lawyers argued the governments contemplate not restoration work, but merely further cleanup of spilled oil. They wanted Holland to declare that any attempt to “extract sums of money from Exxon” based on a cleanup plan constitutes a violation of the 1991 settlement, as the company was released from any further cleanup obligations.
Government lawyers told Holland certain habitat and wildlife studies were still under way, and these would help shape any formal claim against Exxon. One study involves testing a bioremediation technique on oiled beaches.
In denying Exxon’s motion, Holland said the next move is up to the governments.
Holland said he has “no way of knowing” precisely what the governments want until they actually file a claim in court. And so, he said, it’s premature to ask the court to interpret the reopener provision.
“Indeed, it may be that after further evaluation of its demand upon Exxon, the Governments could decide not to pursue the matter,” Holland wrote.
Amount could shrink In a September 2011 court filing, U.S. Department of Justice lawyers said the governments might actually file for a smaller claim than the $92 million demanded in 2006, based on the outcome of the studies. They also said the governments would try to reach a settlement with Exxon.
Once the studies are complete, the governments “will then determine the next steps to make final decisions regarding whether, and what types of, actions are feasible and appropriate to restore the injured habitats,” the DOJ lawyers said.
They gave no definitive timeline.
Holland said Exxon would just have to wait out the governments on the reopener issue.
“The court and the public would like to see this matter resolved, but aside from the uncertainty of whether or not a claim will ever be presented, Exxon presently suffers no particular harm,” he wrote.
Steiner said in a written statement he welcomed Holland’s ruling, but noted it leaves the reopener issue “stuck precisely where it has been for over 5 years.”
He said the DOJ and the state Department of Law had “terribly bungled” the matter, and their failure to go after the money suggests they lack confidence in the claim and “may simply intend to forfeit it.”
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